Amsterdam hotel market: the lasting appeal

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Amsterdam is in the province of North Holland, in the heart of the Randstad, the sixth largest metropolitan area in Europe. The city of Amsterdam is the capital and largest city of the Netherlands, with a population of just over 900,000 as of 2021. While Amsterdam is world famous for its historic canals, its museums of art (Rijksmuseum, Van Gogh Museum), its red light district and “cafés”, it is also an important financial and business center in Europe. More than 2,000 foreign companies have established offices in the metropolitan area, and more than 200 of these companies have their headquarters in the city. Following Brexit, Amsterdam has benefited from an influx of new businesses, with 133 international offices opening in 2021 (including 32 head offices). The city is very accessible, with well-developed local, national and international transport links, including Amsterdam Schiphol Airport, the European high-speed rail network and the North Sea Canal.

Source: HVS
Source: HVS
Sources: HVS research;  RAI Amsterdam Annual Report 2020 — Photo by HVSSources: HVS research;  RAI Amsterdam Annual Report 2020 — Photo by HVS
Sources: HVS research; RAI Amsterdam Annual Report 2020 — Photo by HVS

Economic indicators – Netherlands

Source: IMF — Photo by HVSSource: IMF — Photo by HVS
Source: IMF — Photo by HVS

Tourist demand

Amsterdam attendance grew at a compound annual growth rate of 6.4% from 2010 to 2019, with international attendance leading the growth (6.8% CAGR 2010-19). Top international grocery markets in 2019 were UK (15.5%), US (11.1%), Germany (10.1%) and France (5.2%) , while the domestic market accounted for 17.8% of total attendance. In 2020, attendance was impacted by the COVID-19 pandemic, resulting in a 70% decline from a record high in 2019. Attendance in 2021 was broadly stable compared to 2020, with some signs of recovery domestic market and neighboring countries (Belgium and France). Due to strict cross-border restrictions, demand from the UK saw a further drop of 74% in 2021, compared to 2020 levels, which accounted for only 3% of total visits to Amsterdam this year- the. Following the lifting of restrictions in March 2022, attendance in Amsterdam rebounded strongly. Year-to-May data for 2022 shows strong growth from the year to May 2021, with visits almost quadrupling, but still around 40% lower than year-to-May 2019 levels.

Visits and overnight stays – Netherlands (thousands)

Sources: TourMIS, April 2022 — Photo by HVSSources: TourMIS, April 2022 — Photo by HVS
Sources: TourMIS, April 2022 — Photo by HVS

Hotel performance

  • The Amsterdam market experienced healthy growth in both occupancy rate and average rate before the pandemic, reaching record levels of RevPAR in 2018 and 2019. The strong contraction caused by the pandemic led to a drop in RevPAR by 80% over one year in 2020, as is the case for all major European cities;
  • The duration of strict measures imposed by the Dutch government throughout the pandemic has resulted in little or no recovery in 2021;
  • Recent market evidence points to a strong recovery in demand following the lifting of restrictions in March 2022. Most notably, the citywide average rate is seeing a robust recovery, RevPAR levels for the months of May and June having nearly recovered to 2019 levels.

Key indicators

Source: HVS Research — Photo by HVSSource: HVS Research — Photo by HVS
Source: HVS Research — Photo by HVS

hotel supply

Overall, hotel supply grew at a compound annual rate of 4.7% from 2010 to 2020, with around 2,000 new rooms registered in 2018. Total hotel supply currently stands at around 39,000 rooms, and it is fairly evenly divided into the Premium category (27.4%), the Premium category (23.7%) and the Premium category (22.6%). The largest average growth (CAGR 2010-22) was recorded in the upper class, at 6.3%, or approximately 5,000 rooms.

The ban that was imposed on new hotel developments in the canal district in 2015 resulted in the displacement of planned projects to more outlying areas. However, at the end of 2016, the city of Amsterdam implemented new restrictions on the construction of new hotels in order to better manage the tourist flow in the city. These restrictions essentially prohibit hotel development except in designated areas (such as Overhoeks, Buiksloterham and Indische Buurt) for which development applications can be submitted. This had a substantial impact on the future hotel pipeline.

Hotel pipeline

Source: HVS Research — Photo by HVSSource: HVS Research — Photo by HVS
Source: HVS Research — Photo by HVS

investment market

The Amsterdam hotel investment market was, before the pandemic, one of the most liquid and attractive in Europe, with a significant number of transactions carried out in recent years. Major sales as of 2019 included the 557-room DoubleTree Amsterdam for approximately €430,000,000 (€770,000/per room) by Anbang Insurance to AXA IM – Real Assets, the 90-room Hotel Sir Albert for approximately €58,000 €000 (€645,000 per room) by Sircle Collection to WestInvest, and the forward sale of 579 rooms of the Maritim Hotel Amsterdam for €155,000,000 (€268,000 per room) by Invester United Benefits and IES Immobilien to Union Investment. Compared to the strong activity of 2019, only two transactions took place in the whole of 2020, and three more in 2021, the most important of which was the sale of The Albus hotel (72 rooms) for around €25,000,000 or around €350,000 per room from Hilver-Heuvel to Vischjager Vastgoed BV. For the latest value trends, please see our annual European Hotel Valuation Index (HVI), which shows year-over-year growth in the value of hotel assets in key markets including Amsterdam .

Hotel transactions

Source: HVS Research — Photo by HVSSource: HVS Research — Photo by HVS
Source: HVS Research — Photo by HVS

Outlook

The Amsterdam hotel market has been heavily impacted by government restrictions imposed during the pandemic, which has resulted in particularly weak performance for this market in 2020 and 2021. However, data as of end of June 2022 shows the enduring attractiveness of this market both for its leisure and business demand bases. We expect the post-pandemic recovery to continue to benefit from the limited new supply allowed in the market. This, together with the strong fundamentals of this market and generally well-diversified sources of demand, should allow Amsterdam to quickly regain its position as one of the most coveted hotel markets in Europe. As shown in our European Hotel Valuation Index, hotel values ​​have already started to recover in 2021 and remain among the highest in Europe.

Value trends

Source: HVS Research — Photo by HVSSource: HVS Research — Photo by HVS
Source: HVS Research — Photo by HVS

Sophie Peret
Associate Director
+44 20 7878 7722
HVS

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